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Estate Planning

Matthew Perry’s Estate Plan Demonstrates the Benefits of Trusts

When Matthew Perry, the beloved star of Friends, passed away last year, the world mourned the loss of a comedic icon. However, as details of his estate began to emerge, a curious puzzle presented itself: despite his reported net worth of $120 million, his bank account held (only) $1.5 million. Admittedly, this seems like a whopping sum to most of us, but this amount appears off for a man who earned millions of dollars for just one episode of the show. Shouldn’t he have had much more money than that? The answer lies in the details of estate planning and using trusts as part of your plan.

In this article, we’ll look at Perry’s estate plan and pull out some valuable lessons. These lessons pertain to all of us, not just the rich and famous. To find out how trusts can benefit you, read on.

What is a Trust?

A trust is simply a legal arrangement where a person (sometimes called a “settlor”) transfers assets to someone ( a “trustee”) who manages those assets for the benefit of someone else (the “beneficiaries”). Many types of trusts can be used for various purposes, including estate planning, asset protection, and providing for loved ones.

The trustees appointed to manage a trust play a crucial role in fulfilling the settlor’s wishes. Choosing the right trustees is essential for the effective management of a trust. Trustees should be trustworthy, financially responsible, and knowledgeable about estate planning. They should also be willing to devote the time and effort required to manage the trust’s assets. 

In Perry’s case, it appears he established a trust during his lifetime. This trust, which seems to be named the Alvy Singer Living Trust—Woody Allen’s character in Annie Hall—presumably holds a significant portion of his wealth. In Perry’s case, the trustees were likely responsible for managing his investments, paying bills, and distributing money to the beneficiaries. 

Why would Perry have chosen to establish a trust? There are many benefits, which I’ll break down in greater detail now.

The Power and Benefits of Trusts

There are many advantages to using a trust for estate planning. Here are some of the most common.

Protection from creditors and lawsuits. If a beneficiary faced financial difficulties, their creditors would generally not have access to assets held in a trust. 

Ongoing support during life, incapacity, and after death. Trusts can provide for loved ones more flexibly than a will. A will is a legal document that outlines how your assets will be distributed after your death. However, a trust can be structured to provide support during your life and for your beneficiaries over time, ensuring their needs are met. If you have a will, your assets will usually be transferred to your beneficiaries – even if they are young or financially irresponsible. 

Minimization of estate taxes. Depending on the size of an estate, there may be significant federal and state estate taxes. A trust can reduce or eliminate these taxes.

Court avoidance. A court process called probate takes place after someone dies, and it can be expensive, lengthy, and conflict-laden. If you have a will or no estate plan, court is mandatory. However, the court process may be avoided if you have a trust. This results in less expense, less time, and a decreased probability of conflict. It’s also a public proceeding, and court filings contain personal and financial information you may not want others to see. 

Conflict avoidance. The court process is set up to give all heirs and creditors a claim to your assets. They are invited to file a claim and get to see information about your assets. 

Greater control over what happens to your assets and your family. When you have to go to court, someone other than you – a judge who’s a stranger to you and your family – will make all final decisions about your money, property, and family. But with a trust, you can make those decisions and exercise control over the outcomes.

Preserving assets when there’s a substance abuse issue. It’s no secret that Perry struggled with substance abuse for much of his life, and it’s possible that because of that, he was advised to create a trust to hold his assets. This was a wise decision. Substance abuse can have a significant impact on financial stability, and it is possible that Perry sought to protect his assets from loss, either by his actions or potential creditors and legal issues related to his addiction. You can do the same for a friend or relative if you want to support them and know they struggle to manage their finances responsibly.

These advantages apply to you, too! You do not need to be wealthy to want a trust. You do not have to be charitable or famous to take advantage of the benefits. 

The Appeal of Privacy

Remember when I mentioned above that the court process is public? I also noted that a trust can help you and your family avoid court and its very public nature. If you were wondering, “If it’s true Matthew Perry had a trust, then how come it’s public knowledge that he had $1.5 million in his bank account?” Then kudos! You caught on to something important.

Matthew Perry also had a will, and wills go through probate. Any assets not placed into a trust must be dealt with via your will and, thus, are subject to the court process. Remember when I mentioned that court filings must contain your personal and financial information? That’s how we know about Matthew Perry’s bank account. The funds in his bank account were ostensibly not placed into his trust and are subject to the public probate process. You can look up the court records and read his will – or any will – for yourself. 

His will mentioned that he had trust, which is also common. It doesn’t mention the terms of the trust, who the beneficiaries are, what his other assets are, and who gets what. Our public knowledge is limited to what’s in his will. And if his bank account had been placed into his trust, it would have been kept private, too.

In short, assets placed into a trust are kept private, as is your personal and financial information. Assets left out of a trust are public knowledge. So, when you create a trust, you mustn’t just draft and sign the document and call it a day. You must take the next step and correctly place your assets into the trust. If you don’t do that, you lose all the benefits the trust offers. 

How We Help You Protect What Matters Most

As more details about Perry’s estate emerge (and sadly, his death), we may better understand his intentions and the legacy he will leave behind. While his untimely passing is a tragic loss, his estate planning offers a fascinating look at the advantages of trusts and how you can also take advantage of them. 

We help you create a comprehensive Life & Legacy Plan that may include tools like trusts to protect your assets, maintain your privacy, and ensure your loved ones are cared for—without the headaches of court or the increased chances of conflict. By planning today, you can have peace of mind knowing your wishes will be honored, your family’s future will be safeguarded, and your legacy will be kept private.

Schedule a complimentary 15-minute consultation to learn more. Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

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Estate Planning

What Do Lasagna and Estate Planning Have in Common?

Have you ever heard horror stories about families fighting over Grandma’s jewelry or getting stuck in a never-ending legal battle after someone passes away? Or how long it can take to sell a house tied up in the court process? What about family members being denied their inheritance completely? Unfortunately, these situations happen every day. Not even the rich and famous are immune! A simple Google search will pull up dozens of celebrity stories about all the conflicts after they die.

But most people don’t realize these things are avoidable – if you understand the process. So, if you’ve thought about creating a will or trust to avoid these outcomes, let’s ensure you’re fully aware of what’s at stake first. We’ll use a food analogy throughout this article, so our apologies if we make you hungry.

Lasagna as an Example of the Difference Between a Will or Trust and an Estate Plan

Let’s start by getting clear on what we’re talking about. You’ve probably heard “estate planning” numerous times, but do you know what it is? Unlike what you may have heard or read about, estate planning and the documents involved – such as a will or trust – differ. 

Think of your favorite recipe. We’ll use lasagna as an example. A lasagna recipe includes a few different components: the ingredients needed to make the dish, how much of each ingredient you need, and the steps you have to take to transform the ingredients into a dish. Without the steps, the ingredients are just ingredients—they don’t create anything. 

Estate planning is similar. Your estate plan is the recipe, and the documents are the ingredients. A will or trust may be the pasta or the sauce, but they are not the lasagna. Sure, they’re necessary components of the lasagna, but without the other ingredients and steps, they’re just pasta and sauce. Same with estate planning. If you just create a will or trust, you have just documents. They don’t do anything by themselves.

That most people think the documents ARE the estate plan is a common misconception based on a lack of knowledge. Too many people are focused on the documents, even many lawyers, and so think all they need to do is create those documents, sign them, and call it a day. Even so-called financial “experts” will tell you this. And there’s a new tech industry based on this premise, with do-it-yourself programs like LegalZoom. AI has even joined the fold.

All these people and companies are talking about the documents or ingredients. They are not telling you about the recipe. They are not showing you how to make the lasagna, but rather, they’re telling you about some (not even all) of the ingredients you need. The results are the following: families in court and conflict, fights over necessary ingredients, long wait times to sell a house or distribute any of the assets, and even big, unnecessary tax bills. 

To truly protect your loved ones and ensure your wishes are carried out the way you want, as easily as possible, for the people you love, you need a comprehensive estate plan. This plan should lay out not only the ingredients you need but also in what amounts and what actions must be taken to make the lasagna.

If you haven’t created a comprehensive plan or your current plan fails for any reason, know that there’s a plan already made for you. It’s a plan in your State’s law and may differ significantly from what you want. 

Your State’s Recipe for Lasagna May Be Gross

Let’s return to our lasagna example to illustrate the difference between the State’s plan for you and one you can create for yourself.

Let’s say the State’s recipe for lasagna includes spicy sausage, but you can’t tolerate spicy foods. The state’s plan may contain meat, but you’re a vegetarian. Or, it could be that the State’s recipe includes mushrooms, but your child is allergic to mushrooms. Some ingredients may be missing altogether, and the recipe will probably tell you that you can’t cook the lasagna for months or years (goodness, your family will be hungry!). Whatever the situation, the State’s plan may include some components you don’t like or even one that could be disastrous to your family. 

In reality, your State’s plan says how your assets will be distributed, who will get them, and in what amounts. It requires a court process, which can be lengthy and expensive, and sometimes assets are frozen until the court process is over. It’s also set up for conflict, as your family members – even if you’re estranged – must get notice of the court proceeding, what assets you have, and are invited to make a claim for your assets. You may not like any of this.

If not, here’s the good news. The law also says you can create your plan and decide on who you want to inherit your assets and how. If you create your plan, you get to choose to give money to charitable causes that matter to you, which the State’s plan does not allow for. And if you create your plan, you can also decide whether you want your loved ones to go through the court process. Yes, the court process can be optional. 

What Recipe Do You Want to Use?

By creating your estate plan, you get to choose your lasagna recipe. You can decide whether you want meat, veggies, or mild or spicy sausage. You get to exclude ingredients your family members may be allergic to. You even decide if you want to share your lasagna with someone else. And you get to decide when to cook the lasagna, whether you want it to be eaten tonight or assembled, frozen, and saved for another day. 

It’s entirely possible that you don’t think the State’s recipe is gross, and you wouldn’t change a thing. But you won’t know that until you know the details of the State’s plan and how those details pertain to you, your assets, and your family. Or, it could be that you think the State’s recipe is entirely gross, and you want to pick one you and your family like. Either way, know what you want to create, be clear on how to do it, and do it correctly. Luckily, we can help. 

How We Help You Get it Right

We’ve seen too many families suffer negative, yet unnecessary, consequences after a loved one dies. And if you haven’t experienced it yourself, you probably will. However, with proper education, beginning with correcting the misconception that estate planning and the document are the same, we believe we can break the cycle of strife. 

We start with education so you are clear on what the State’s plan is for you and what you can do to create your own plan that aligns with your values, goals, and family, and most importantly, that it works when you need it to. 

We call it Life & Legacy Planning. Once you’ve created your Life & Legacy Plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your property protected. Book a call with us today to learn more. Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Categories
Estate Planning

3 Questions to Ask Yourself Before Creating Your Estate Plan With AI

Have you jumped on the AI bandwagon yet? If so, you’ve probably used it to make your life easier. AI can be incredibly helpful, especially when the stakes are low. Need a personalized meal plan or an exercise routine? AI can handle that. But when it comes to estate planning, some people use AI for what they believe to be a simple and cost-effective solution. 

The allure of Do-It-Yourself estate planning through AI is strong, especially when you think your situation is straightforward. You may also think you have little money, so your circumstances aren’t complicated. Both of these beliefs are extremely common – and rarely true.

Here’s the truth: estate planning is not just about creating a set of documents, and it’s almost always more complicated than you think. To do it effectively, it must be personalized to fit you, your family dynamics, and the specific types of assets you have. But unless you’re an expert, you don’t know how your circumstances apply to the law and your values – or how your estate plan should be structured to fit the law and your values. AI cannot do any of this. And if you get it wrong, there are legal (as well as financial) consequences. You need a human to guide you, a human who understands you, your family, your assets, your wishes and desires, and how all these things work together with current law. 

So before you’re tempted to use AI for your estate plan, ask yourself the following three questions. Then, consider your answers before turning to AI or any other free or cheap legal service. If you’ve already done your estate plan, these questions are essential for you, too. 

Question No. 1: What Matters?

First and foremost, who or what matters most to you? When you’re creating a legal plan for what happens if you become incapacitated and when you die, the place to start is by getting clear on what matters. Is it the money you’ve worked hard to earn, or is it the people around you and the relationships you’ve nurtured? Most likely, it’s the people. 

Think about this. How are you affected when a loved one passes away? You’re probably filled with grief, and their absence leaves a void in your life. While their money can ease financial strain, the memories and the love you shared truly matter (this is their “legacy”). Your loved ones will feel the same way after you’re gone. What will your legacy be? 

Imagine that your family is left to deal with a significant legal and financial mess after you’re gone, all because you didn’t create an estate plan or created one that failed. Are you ok with that being your legacy? Does it matter that people must spend time away from work and their lives to manage your affairs? And what if they ended up fighting or estranged? Does that matter to you? 

What about your assets? Does it matter to you if your estate has to pay unnecessary taxes or if your assets get lost and turned over to your State’s Department of Unclaimed Property? Or do you care about supporting a cause you believe in or supporting a family member who needs help? 

When you create a Life & Legacy Plan with our office, you gain the power to influence these outcomes in a way that AI cannot do. But first, get clear on what truly matters to you.

Question No. 2: What’s It Worth?

Once you’re clear on what matters, the next question is: what are those things worth? How important is it to preserve your family’s relationships, for example? How important is it that your assets don’t get used to pay taxes when there’s an option to give them to your loved ones? It’s critical to know not only what’s important but how important it is so you know how much time, energy, attention, and money to dedicate to it. 

One of the main reasons people may use AI to draft their estate plans is that they think estate planning is simple. However, estate planning is much more complex than most people realize. Even licensed attorneys who practice estate planning often find themselves overwhelmed by the intricacies of the law, which changes regularly and varies from state to state. AI is a one-size-fits-all approach that doesn’t take into account the complexities. So, if you rely on AI, you’re leaving a lot to chance. Is it worth it to you to take a chance on what matters? There is no wrong answer here; it may be yes, or it may be no. The key is that you’re being true to yourself.

Question No. 3: Is AI Actually Cheaper and Easier?

And now we’re at the third and final question: is AI or Do-It-Yourself legal cheaper and more accessible than working with an expert? If the program makes a mistake in your estate plan and your family ends up in court, embroiled in conflict, with relationships irreparably broken, was it worth the supposed savings? What if your assets were lost to the government, eaten up by unnecessary taxes, or depleted by lawyers’ fees and court costs due to litigation? 

When you weigh the potential costs—financial, emotional, and relational—against the upfront savings you might achieve by using AI, the true worth of those things that matter to you becomes more apparent. You see that estate planning is about much more than just money; it’s about protecting the people you love and ensuring your legacy is honored as you intend. 

You and Your Family Deserve More Than a Quick and Cheap Fix

The way to ensure that your plan works when you and your loved ones need it to and saves you and your family money is by working with me to create a Life & Legacy Plan. With my Life & Legacy PlanningⓇ process, I’ll guide you to get clear on what matters; together, we’ll create a complete plan that honors your wishes and creates a loving legacy at a price that fits your budget. When it comes to something as important as your estate plan, it’s worth taking the time to do it right. Your legacy deserves more than a quick fix—it deserves the thoughtful attention of someone who understands your unique situation and can help you navigate the complexities of the law to achieve your goals.

We understand that estate planning isn’t just about the documents you sign or the money you leave behind. It’s about ensuring that the people and things that matter most to you are protected and honored in the way you intend. Once you’ve created your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your legacy preserved. 

Schedule a complimentary 15-minute consultation to learn more. Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Categories
Estate Planning

Reflections on Your Legacy

As the seasons change and we transition from the warmth of summer, it’s a perfect time to reflect on the contributions and achievements that have shaped your life. The work you’ve put into building your home, family, and career is a testament to your dedication. As you enjoy some well-deserved relaxation, take a moment to consider everything you’ve worked hard for throughout your life. Let’s reflect on these together.

Reflection No. 1: Remember When?

Do you recall your first job? It could be babysitting for a neighbor or mowing lawns as a kid. You may have worked part-time during high school, balancing classes, extracurricular activities, and work. How did it feel to earn your first paycheck and experience a sense of independence? It was likely empowering, marking the beginning of your journey toward financial and personal responsibility.

Even if you didn’t work as a teenager, you probably worked hard in other areas—whether striving for good grades, excelling in sports, or mastering a musical instrument. Each of these experiences contributed to your growth, instilling a sense of pride and accomplishment as you saw the results of your efforts.

Take a moment to reminisce. Think about those early achievements and the sense of independence they brought. What memories stand out that you’d like to share with the younger members of your family?

Reflection No. 2: In the Thick of It

As you grew older, your work evolved. Whether you pursued higher education or jumped straight into the workforce, you eventually landed that first “real” job, bringing with it both financial rewards and adult responsibilities. Perhaps you bought your first home, started a family, or took on significant financial commitments like a mortgage or student loans.

This stage of life is often intense, filled with the demands of balancing work, family, and other responsibilities. It may feel like all you do is work, but there’s a deep satisfaction in seeing the fruits of your labor—especially when it comes to your children. Watching them grow, learn, and become independent adults is a reward for all the hard work you’ve invested in them.

If you’ve started a business, you’ve likely poured much of your time, energy, and resources into turning your vision into reality. You’ve created jobs, solved problems, and contributed to your community.

Reflect on your achievements during this period. Have you enriched the lives of others and supported loved ones in reaching their potential? Have you created something meaningful in the world? Consider both the tangible results, like a successful career or business, and the intangible ones, like the love and guidance you’ve given. How do you feel about your life at this stage? What wisdom would you like to pass on to those you care about?

Reflection No. 3: What Happens Next?

As you enter the later stages of life, your work shifts once again. You may be considering retirement, winding down a business, or simply enjoying the accomplishments of your earlier years. If you have children, you might now be watching them build their own careers and families.

This is a time to savor the fruits of your labor, but it’s also a moment to think about the future. What steps can you take to ensure that everything you’ve worked for is protected and passed on according to your wishes? How can you prevent your assets from being lost, mismanaged, or causing conflict among your loved ones?

Now is the time to make important decisions and document them in a Life & Legacy Plan. Such a plan is a comprehensive estate strategy that ensures your assets are distributed as you intend, keeps your family out of court, and preserves the relationships you’ve cultivated over the years. It also helps you control how you’ll be remembered—your legacy.

Before dismissing the idea of a legacy as something only for the wealthy or famous, consider this: Legacy is about how you’ll be remembered. Through a Life & Legacy Plan, you can ensure your life’s work is honored and that your story is preserved for future generations. Many people find this aspect of planning to be the most meaningful part of the process.

Warning! Life Doesn’t Always Go as Planned, So Don’t Wait

Ideally, you’ll have the time to make it through each of these stages of life, but there are no guarantees. Life is unpredictable, and while it’s unpleasant to think about, planning for the unexpected is essential. By facing your mortality and planning accordingly, you can ensure that your legacy is one of love and careful stewardship.

Estate planning isn’t just for the wealthy or elderly—it’s for everyone, regardless of your stage in life. If you haven’t created a plan, the state will have one for you, but it likely won’t align with your wishes. By taking control of your plan, you can dictate how your life’s work will be remembered and passed on.

How We Help Secure Your Life’s Work

Your life’s work is a testament to your dedication and perseverance. From your first job to your current achievements, you’ve built a legacy worth protecting. As you reflect on your journey, consider how you want that legacy to endure. Take control of your future and protect what matters most by creating a comprehensive Life & Legacy Plan with us. Book a consultation call today to learn how we can tailor a plan that honors your life’s work and ensures your legacy lives on. Let’s work together to secure your family’s future and celebrate the fruits of your labor for generations to come.

Schedule a complimentary 15-minute consultation to learn more. Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Categories
Estate Planning

How Relying On Beneficiary Designations Put Your Family at Risk (And How To Fix It!)

You’ve worked hard to build your assets and secure your family’s future. Like many responsible adults, you’ve named beneficiaries on your retirement accounts, life insurance policies, and maybe even your banking and investment accounts. It feels good to know you’ve put something in place for your loved ones. 

While beneficiary designations serve a purpose, they’re not a comprehensive estate planning solution. Relying solely on them can lead to unintended consequences and potential financial disasters for your loved ones. Let’s delve into why beneficiary designations fall short and the risks you may unknowingly take with your family’s financial future. 

The Dangers of Naming Minor Children As Your Beneficiaries 

You love your children and want to ensure they’re cared for if something happens to you. Naming them as beneficiaries on your accounts is a straightforward way to achieve this goal. However, this approach can backfire spectacularly when your children are minors.

Designating a minor as a beneficiary creates a legal and financial predicament. Financial institutions cannot hand over large sums of money to children, so the court will likely appoint a guardian to manage the funds. This process can be time-consuming, expensive, and may not align with your wishes.

Even more concerning is what happens when your child reaches the age of majority, typically 18 or 21, depending on your state. At this point, they gain complete control of the inherited assets. Ask yourself: Is your 18-year-old ready to manage a six or seven-figure life insurance policy? What about your retirement account? For most young adults, the answer is a resounding no.

Imagine your child receiving a windfall at an age when they’re still learning to navigate adult responsibilities. They might make impulsive financial decisions, fall prey to manipulative friends or partners, or simply lack the maturity to handle sudden wealth. By relying solely on beneficiary designations, you’re potentially setting your child up for financial mismanagement or even exploitation. It’s a sobering thought that underscores the need for comprehensive planning.

When a Beneficiary Dies Before You

Life is unpredictable, and tragedy can strike at any time. While it’s uncomfortable to contemplate, your named beneficiaries may predecease you or die with you in an accident. This scenario can throw your estate into chaos if you’ve relied entirely on beneficiary forms.

When a named beneficiary dies before you, the fate of those assets becomes uncertain. Some accounts may have provisions for contingent beneficiaries, but many people neglect to name backups. In other cases, the asset may revert to your estate, potentially subjecting it to probate – a time-consuming and potentially expensive legal process you likely wanted to avoid by using beneficiary designations in the first place.

The situation becomes even more complex if you and your primary beneficiary die simultaneously or in quick succession. In such cases, determining the order of death can have significant implications for how your assets are distributed. Without a comprehensive estate plan, your assets may go to unintended recipients or get tied up in lengthy legal battles.

Establishing a will or trust can create a chain of inheritance that accounts for multiple contingencies, ensuring your assets are distributed according to your wishes regardless of the circumstances. This level of control and reassurance is a key benefit of comprehensive planning.

The Risks of “Set-It-and-Forget-It” Planning

Life is dynamic and filled with changes, both big and small. Your financial situation evolves, relationships shift, and laws change. Yet, all too often, people treat beneficiary designations as a “set it and forget it” solution. This static approach to estate planning can lead to severe problems.

  • Consider how much can change over a few years or decades.
  • You may divorce or remarry, dramatically altering your family structure.
  • Children grow up, and your relationship with them may change.
  • Your financial situation could improve significantly, making previous designations inadequate.
  • Tax laws and regulations around inherited assets may be revised.
  • You might develop new philanthropic interests or want to include charitable giving in your legacy.

If you don’t regularly review and update your beneficiary designations, they may no longer reflect your current wishes or circumstances. It’s not uncommon for people to unknowingly leave substantial assets to ex-spouses or estranged relatives simply because they failed to update their beneficiary forms. 

In addition, beneficiary designations don’t allow for the nuanced distribution of assets that many people desire as their wealth grows. You should establish conditions for inheritance, protect assets from creditors, or provide for family members with special needs. These complex wishes simply can’t be accommodated through standard beneficiary forms.

The Peace of Mind That Comes From Careful Planning

To truly protect your legacy and ensure your wishes are carried out, you need a Life & Legacy Plan rooted in education about what would happen to you, your family, and your assets if you become incapacitated and when you die. From there, we craft a plan that reflects your wishes, works when needed, and fits within your budget. This might include a will, one or more trusts, powers of attorney, healthcare directives, and carefully considered beneficiary designations. When we complete your original Life & Legacy Plan, you’ll have peace of mind knowing that it will:

  • Protect minor beneficiaries and ensure assets are managed responsibly;
  • Provide for multiple contingencies, including the death of beneficiaries;
  • Minimize taxes and avoid probate when possible;
  • Reflect your values and complex wishes for asset distribution;
  • Adapt to changes in your life, finances, and the legal landscape.

Don’t leave your legacy to chance or expose your loved ones to unnecessary financial risks. Your family’s future security is worth the time and monetary investment in proper planning. Remember, a truly effective estate plan is a living document that grows and changes with you, providing peace of mind today and security for generations to come. 

Know, too, that if you’ve already created your Life & Legacy Plan with me, keep an eye out for reminders to review and update your plan. If you know that you need to update your plan before we remind you, don’t hesitate to call us immediately.

Schedule a complimentary 15-minute consultation to learn more about how we support you. Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Categories
Estate Planning

Would You Make This Million Dollar Mistake?

Imagine this: You’re in your twenties, just starting your career. You fill out a form at work, naming your live-in significant other as the beneficiary of your retirement account. You start contributing to your retirement account, and it begins to grow. Fast-forward 28 years—you’ve long since ended that relationship, lived a full life, and then died. But you never changed that beneficiary designation, and now that ex-partner is entitled to your million-dollar retirement nest egg, leaving your family with nothing. This situation, if not addressed, could lead to significant financial loss for your loved ones. 

Does this sound far-fetched? It’s not. This is precisely what happened in a high-profile lawsuit involving Margaret Losinger, her former boyfriend, Jeffrey Rolison, his estate, and Proctor and Gamble, the Company he worked for during those 28 years. The lawsuit, which gained national attention, serves as a cautionary tale about the importance of updating beneficiary designations.

Here’s a closer look at this shocking real-life story, the lessons we can learn, and how having a trusted advisor at every stage of life can protect you from making a million-dollar mistake like this or any other errors you might be overlooking. 

What Happened?

In the 1980s, Jeffrey Rolison dated Margaret Sjostedt, and the two lived together. Rolison worked at a Procter & Gamble (P&G) plant, where he signed up for a profit-sharing and savings plan. In 1987, he listed Sjostedt as the sole beneficiary of his retirement account. The relationship ended two years later, and both moved on. Sjostedt eventually married, taking on the last name Losinger. 

Rolison, however, never updated his beneficiary designation on his retirement plan. In 2015, Rolison passed away at age 59, single and childless, with no will and no guidance on who should inherit his assets. His retirement account, which had grown to $1.15 million, was still designated to Losinger, nee Sjostedt.

Rolison’s brothers, Brian and Richard, were shocked when they learned that Losinger was the beneficiary of Rolison’s retirement account. They believed their brother wouldn’t have intended for his long-ago ex-girlfriend to receive his retirement savings. The brothers filed a lawsuit against P&G and Losinger in 2017, trying to get the money directed to Rolison’s estate. 

On April 29, 2024, an appeals court issued an order, ruling that Losinger was entitled to the money. After fighting for four years, Rolison’s family lost their claim, the million dollars in Rolison’s retirement account, and all the legal fees and court costs invested in the fight. Because we have no doubt you wouldn’t want this to happen to your family, read on. 

Why Even “Simple Estates” Require Trusted Guidance

Before we go on, I’ll clarify estate planning, how beneficiary accounts factor in, and why you likely need the guidance of a trusted advisor, even if you think you don’t have an estate, your estate is “simple,” or you don’t really need an estate plan. Even if you don’t consider yourself wealthy or think your estate is straightforward, you still need an estate plan to ensure your assets are distributed according to your wishes. 

What estate planning is. Many people consider estate planning something only needed by the wealthy or the elderly. As you can see from this case, that’s just not true. Rolison wasn’t rich when he named Losinger as the beneficiary of his retirement account. And he probably wasn’t wealthy when they broke up. Nevertheless, not having an estate plan or the trusted guidance he would have needed to know what he needed, he made his ex-girlfriend a wealthy woman and cost his siblings a lot of time and money in the process.

At the most basic level, estate planning is about ensuring all of your assets pass to the people you want in the way you want, with the proper guidance and support to ensure that happens with the least effort, cost, and mess possible. It’s also about ensuring that if you become incapacitated, your wishes are known, honored, and able to be followed with the least cost and the most privacy possible. 

Most importantly, estate planning is about your choices and your freedom. So, how important is it to you that you have a say in what happens to you, your hard-earned assets, and your loved ones when the time comes? If it’s important, you need an estate plan. It’s truly as simple as that. Otherwise, the government gets to decide on your behalf. When you create an estate plan, your wishes override the government’s plan for you and your loved ones. 

How Beneficiary-Designated Accounts Factor Into Your Estate Plan

Beneficiary-designated accounts—like retirement accounts or life insurance—are part of your estate plan. Beneficiary designations override the government’s plan for you and, if you created one, whatever you might have written in your will or trust. 

From the case I shared here, we learn that Rolison did not have a will, but it would not have made a difference even if he had. Beneficiary designations come before any will or trust, even if you made the designations years ago. 

Beneficiary forms are powerful documents. They determine who gets your retirement accounts, life insurance policies, and bank accounts, often taking precedence over your will. If you filled out a beneficiary form years ago and still need to update it, the person named on it will likely receive the assets, regardless of your current wishes. So, the biggest takeaway from the Rolison/Losinger story is that beneficiary accounts are an integral part of your estate plan and should be reviewed regularly. This is why we include a review of your accounts, beneficiary designations, and an inventory of your assets – plus, we have to update programs for ongoing review – in all of our Life & Legacy Plans.

Why You Need Regular Reviews of Your Accounts and Beneficiary Designations

Rolison’s case highlights that it’s easy to forget about your beneficiary designations, especially if they were filled out years ago. However, the case also tells us that neglecting to update your accounts can lead to unintended consequences and legal battles for your loved ones. Regular reviews of your accounts and beneficiary designations can prevent such situations, making you feel proactive and in control of your financial future. 

In Rolison’s case, his brothers argued that P&G failed to inform him about his beneficiary designation adequately. They claimed the company provided insufficient warnings when it changed service providers and in its monthly statements. However, most companies do not remind you to review and update your beneficiary accounts. When was the last time your bank reminded you to review the beneficiary designations on your checking account (if ever)? What about your life insurance company? And if not, have you taken it upon yourself to check your beneficiary designations regularly? Your life is busy enough. Is this a priority? 

If not, it should be. In its decision, the court stated that it ruled in favor of P&G and Losinger because the individual is responsible for keeping beneficiary information current. 

How Accountability Makes All the Difference

Your life is busy. Sometimes, making it through the day with all your responsibilities can be challenging. Probably the last thing on your mind is planning for your death and incapacity. The second-to-last thing is reviewing and updating your beneficiary accounts. You’re probably thinking you can do it later.

But the truth is this: “later” could be tomorrow. We all know we will die; we just don’t know when. Death doesn’t care about your age or how busy you are. I’m not saying this to scare you. It’s a fact, and I want you to be prepared so that what happened to the Rolison family won’t happen to yours. Death doesn’t have to be scary. When you plan for it, you’ll find that you can live your life with more purpose and peace of mind, knowing you’ve done the right thing for your loved ones. 

If this sounds good, know that having a trusted advisor who is there for you throughout your lifetime can make all the difference. That’s why my Life & Legacy PlanningⓇ process includes regular check-ins and reviews of your plan, including your beneficiary accounts. The best part is you never have to think about it alone! Unlike most lawyers who do estate planning, I will remind you regularly to update your plan – and keep you accountable. I’ll also be there for you as life changes so your plan reflects your current wishes. Together, we’ll ensure your family inherits your accounts, not an ex-girlfriend you dated 40 years ago. 

We Do the Heavy Lifting, So You Don’t Have To 

When it comes to planning for your death and incapacity, we do the heavy lifting for you, freeing you to concentrate on your responsibilities to your family, your work, and yourself. We help you create a Life & Legacy Plan so that your loved ones stay out of court and conflict and that your plan works when needed. Once you’ve made your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, your property protected, and your plan updated throughout your lifetime. 

If you’ve already created your Life & Legacy Plan with us, keep an eye out for our reminders to review and update it. If you know that you need to update your plan due to a life change, don’t hesitate to call us immediately.

Schedule a complimentary 15-minute consultation to learn more.

Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Categories
Estate Planning

Celebrity Estate Plans Series Part 4 of 4: Elvis and the Scammers

For the last few weeks, we’ve discussed celebrities and how they planned for their deaths. We started with the King of Pop, Michael Jackson, so ending our 4-part series with the King of Rock, Elvis Presley, seems fitting. 

Why discuss a man who’s been deceased since 1977? A recent case involving Graceland serves as a stark reminder of the audacity of scammers. This case is a wake-up call for property owners and potential heirs. Let’s delve into this unusual tale to understand how you can assert control over your assets and protect them from unscrupulous actors.

How It Went Down

You might think that a well-known property like Graceland would be untouchable, but that didn’t stop a mysterious company from trying to steal it. A group calling itself Naussany Investments and Private Lending claimed that Graceland’s owners owed them millions from an old loan. They even set a date to auction the property to the highest bidder. But there was just one problem – the whole thing was a scam.

Riley Keough, Elvis’s granddaughter and the current owner of Graceland, quickly fought back. She filed a lawsuit, saying her mother, Lisa Marie Presley, never borrowed money from this company or put Graceland up as collateral. The courts agreed, stopping the sale just in time. Keough’s swift action got the attention of the Tennessee Attorney General’s office, which then turned over the case to the FBI, and a federal investigation is pending.

Unfortunately, there’s been a rise in these types of scams, and they aren’t just targeted at the rich and famous. Scammers can take advantage of those who have never had a top-10 hit. A Wall Street Journal article published on June 3, 2024, breaks down a typical scenario, which is on point:

“Here’s how it works: A fraudster targets your house and assumes your identity, using tactics similar to identity thieves to acquire your personal information and create fake IDs. He or she then tries to sell it to an unsuspecting buyer by executing a forged deed in your name. An alternative scam is to submit a mortgage application in your name to get cash out of the house.”

Often, people don’t find out this has happened until the sale is complete, and by then, it may be too late to get the property back—or at least it would be very time-consuming and costly. Some people cannot fight back because they don’t have the financial resources to do so, and the results can be utterly heartbreaking.

If it can happen to Graceland, it can happen to anyone. So, how can you identify these scams before they escalate? The key is knowledge. Equip yourself with the right information to spot these scams before they become a threat.

Red Flags You Can’t Ignore

When you’re dealing with property, loans, and estate planning, keep your eyes peeled for these warning signs:

Paperwork problems: The documents in the Graceland case had many issues. The dates didn’t match up, the signatures looked fishy, and the notary said she never met Lisa Marie Presley. Always read the fine print and question anything that looks off. You should also consult with a lawyer immediately if you suspect something fishy. A lawyer can confirm your suspicions and help you take action right away. 

Ghost companies: According to the news articles, Naussany Investments was hard to pin down. They had no actual address, just P.O. boxes, and weren’t registered as a business anywhere. Do your homework before you deal with any company, especially for something as important as a loan. Look them up online, check with the Better Business Bureau, and be bold and ask probing questions.

Timing: The scammers waited until after Lisa Marie Presley passed away to make their move. Be extra cautious about any claims against a deceased person’s estate – fraudsters often target families when they’re most vulnerable. 

Steps You Can Take to Protect Yourself

Understand that you can take proactive steps to safeguard yourself and your loved ones before any warning signs appear. Here are some practical measures to ensure the protection of your property.

Keep good records: Make sure all your important documents are organized and easy to find. This includes property deeds, mortgage papers, and any loans you’ve taken out. If someone makes a false claim, you’ll have the proof to fight back as quickly as Riley did. Regular review and updates of these documents are crucial.

Be skeptical: It is if something sounds too good to be true. Be wary of unsolicited offers or demands, especially if they come with pressure to act quickly. 

Stay in the loop: If you’re inheriting or managing property for someone else, know what’s happening. Are the taxes paid? Is there a mortgage? The more you know, the harder it is for scammers to pull a fast one. Riley Keough was able to take action quickly enough to stop the sale because she was paying attention. 

You also want to make sure someone else is paying attention to your affairs in case you become incapacitated. In last week’s article, we discussed what can happen if you become incapacitated and you haven’t planned for it. If you missed it, here’s a sneak peek: it took months for Jay Leno to be able to manage his wife’s financial affairs once she was unable to herself. And as we’ve seen with the Graceland case, months could mean the difference between keeping your property and losing it. If you haven’t planned for your incapacity, book a call with me using the scheduling link below, and let’s talk about how we can get that taken care of for you.

This brings us to the most important thing you can do to protect yourself. Incapacity planning isn’t enough. You need a solid and thorough Life & Legacy Plan.

A Solid Estate Plan is the Key

A solid estate plan creates a legal framework that’s much harder for fraudsters to penetrate. The type of planning I do, called Life & Legacy PlanningⓇ, is solid and thorough. It covers all possible scenarios so you and your family are prepared for anything that can happen after your death or during your incapacity. It includes an inventory of all your properties and other assets, so you know exactly what you have, and your loved ones will also know if they need to step in and help. A Life & Legacy Plan also includes regular reviews and updates so your plan stays current with changing laws and circumstances, closing potential loopholes that scammers might exploit. 

Finally, we can help you ensure your loved ones are aware of these risks and familiar with your estate plan. As we’ve learned from Elvis’s estate, the more eyes watching out for fraud, the better.

How We Help You Not Fall Victim to a Scam

Scams are rising, and the best time to protect yourself is now. We help you create a Life & Legacy Plan so that your loved ones stay out of court and conflict and have a plan that works when you (and they) need it to. Once you’ve created your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your property protected. 

Schedule a complimentary 15-minute consultation to learn more. Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Categories
Estate Planning

Celebrity Estate Plans Series Part 3 of 4: Jay Leno’s Case is No Laughing Matter

For the last two weeks, we’ve discussed celebrities and how they planned (or didn’t!) for their deaths. In this third installment of our four-part celebrity series, we discuss a topic that no one wants to consider as it may seem to be a fate worse than death: incapacity. Unlike death, not everyone will become incapacitated. Yet, it’s an essential part of your future planning because if you do become incapacitated, you want to have made your choices well before that occurs. To illustrate the importance of planning for incapacity, we’ll examine the real-life court case involving Jay Leno and his wife, Mavis. I assure you, it is no laughing matter. A comprehensive Life & Legacy Plan can provide reassurance and peace of mind, and we’ll explore its benefits in this context. 

The Leno case highlights what happens when you or a loved one becomes incapacitated and what can happen if you have not planned in advance. From the Leno case, we can learn several lessons, including 1) What incapacity is and what it is not, 2) What a spouse can and can’t do with the other spouse’s financial affairs, and 3) How you can end up in court with all your affairs becoming public knowledge. We’ll address all three topics here, emphasizing why these matter, even for tf us who have never hosted “The Tonight Show.”

Let’s start with the basics: what do we mean by discussing “incapacity”?

What Incapacity Is and What It’s Not

If you become incapacitated, you’ve lost the ability to make sound financial, medical, or legal decisions for yourself. You may even make harmful decisions or be unable to communicate at all. Incapacity can result from several circumstances, including a tragic accident, a serious, end-of-life illness, or aging-related challenges, such as dementia or Alzheimers. Like death, incapacity can strike at any time and any age. Once it does, it’s too late to get your affairs in order, and your loved ones will be stuck in a mess. This is why planning for incapacity is not just a good idea, it’s a necessity. 

This may seem obvious, but stay with me: It’s important to note that incapacity occurs while you’re alive. I say this because estate planning, to some degree, has much to do with timing. You can have a plan and create documents that deal with your incapacity. However, that plan and documents become null and void once you die, and another document is needed.

This matters to you: If you’re like many people, you’ve heard of a document called a Power of Attorney. You may even have authority for an aging relative under a Power of Attorney. In my practice, however, I’ve found that most people don’t realize that the authority granted under that Power of Attorney ends as soon as the person granting the power dies. So, while you may be able to access your loved one’s checking account to pay bills while they’re alive, that ends immediately at death if your access was under a Power of Attorney. You must then get separate authority – from a court if assets are not held in a trust – to handle the remaining assets after death. In simpler terms, the legal documents you have in place for incapacity may not be enough, and you could end up in court if you’re not prepared.

This means your incapacity planning and post-death planning must work together so the transition is handled smoothly and with as much ease for your loved ones as possible. And that brings us to the Leno case.

So, What Happened In the Leno Family? (And What It Means for You)

Mavis Leno, Jay’s wife of more than 40 years, is battling dementia and has reached the point where she can no longer handle her financial affairs. So, Jay had to go to court (essentially filing a lawsuit against his wife) to be able to manage her finances. After a few months, the court ruled and gave Jay the requested authority.

That’s essentially the entire story. But we can’t stop there! Even from just three simple sentences above, several key takeaways exist. 

Here are the highlights:

Even though they were married, Jay did not have automatic authority to manage Mavis’s finances. And neither will you if you’re married and your spouse has separate assets. Any assets or accounts you own are your property and your property alone. Marital status is irrelevant. And, if you don’t have advance planning in place, your spouse could need to go to court and sue your “estate” to get appointed and be able to take control of your assets. 

Leno had to file a lawsuit (against his wife) to gain control of his wife’s finances. That’s the process, no matter what State you’re in. If you don’t have advance planning and you become incapacitated, someone will need to go to court to get authority, even if you have powers of attorney in place. And it will cost time (a few months in most cases) and money. While waiting for the court to rule, you won’t be able to pay your spouse’s bills using their money (or they may spend away, unaware of what they’re doing). That leaves you with two options: 

You can pay the bills with your money and then get reimbursed later. This may be fine, especially if you have the financial means. But if you don’t have immediate access to cash, say your spouse paid all the bills from their account, this could mean trouble and potential asset loss. Or, bills simply go unpaid. Maybe you can explain the situation to the financial institution, and they will be patient while the court process plays out, but this doesn’t always happen. 

The court process is set up for conflict, and the more conflict there is, the longer the process will take. In Leno’s case, he and Mavis have been married for over 40 years, and it’s their first and only marriage (relationship goals, right?). Given this fact, it’s reasonable to assume that no one challenged Jay’s request. But what if one of them had been married before and had children from the prior marriage? And what if one of those children wanted to ensure they got their inheritance and didn’t want the step-parent to have any control over the money? Sadly, this happens all the time. When it does, the case can go on and on, meaning court costs go up, and the assets in question could be at risk due to the time delay. 

Leno’s personal and family information became public knowledge, but not because he’s famous. In most States, you must disclose your address, your family members and their addresses, and information about the financial assets. The Leno family’s story is available for all of us to read, not because he’s famous, but because they had to go to court. 

This can be problematic because scammers are paying attention. They tend to pay particular attention if you (or someone you love) are vulnerable, especially if you’re older. I could write books about how often older people fall prey to these scams. And they’re all disturbing.

So, what have you gleaned from these insights so far? If anything concerns you, know there is a much better way this could have been, and this better way lies within your reach. 

A Life & Legacy Plan Keeps Your Affairs Private and Your Family Out of Court and Conflict

A Life & Legacy Plan solves the problems that left Jay Leno having to sue his wife’s estate to get access to her accounts. With a Life & Legacy Plan in place, you would have a seamless transition from capacity to incapacity and then to death. There’s no time delay; assets can be immediately available if needed. A Life & Legacy Plan can also keep you and your loved ones out of court and conflict, saving time and money and keeping all your affairs private.

When you work with me to create your Life & Legacy Plan, we’ll ensure your plan stays updated throughout your lifetime. This is critically important because if your estate plan doesn’t reflect your current life circumstances, the time you need won’t work. That means you end up in court, just like the Leno family; for context, most attorneys ensure your plan stays current. But I’ve seen too many plans fail because of this; we’ll review your plan at least every three years and make updates as necessary. 

We’re Here for You Throughout All Of Life’s Changes

Incapacity planning is more crucial than ever, especially with cases of dementia on the rise. According to Alzheimer’s Disease International, over 55 million people worldwide currently have dementia, and that number is expected to increase to 78 million by 2030. Whether you’re diagnosed with dementia, another severe illness, or a terrible accident that results in your incapacity, a Life & Legacy Plan will help ensure you’re prepared, no matter what happens.

We help you create a Life & Legacy Plan so that your loved ones stay out of court and conflict and have a plan that works when you (and they) need it. Once you’ve created your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your personal information kept private.

Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Categories
Estate Planning

Celebrity Estate Plans Series Part 2 of 4: Vanilla Ice Has Thoughts

This week, we’re continuing to look at the lives of 4 celebrities and how they’re preparing for the inevitable (or didn’t!). Last week, we examined Michael Jackson’s planning and the holes in his plan that resulted in his family being embroiled in court and conflict for 15 years and counting (if you missed it, go back and check it out!) in this second article of our 4-part celebrity series, Vanilla Ice chimes in with his estate planning experience, advice, and lessons learned on a video he posted to his YouTube channel. He has a lot to say! 

Vanilla Ice (Really) Hates Estate Taxes

Vanilla Ice shares the story of his buddy Mark, whose parents owned a sprawling property in Palm Beach, Florida. When they passed, Mark and his siblings sold the estate, expecting to be set for life. However, estate taxes ended up taking over 80% of their profit. Ouch.

Vanilla Ice calls this tax a “generational wealth killer,” he’s not wrong. Estate taxes can sneak up and bite a massive chunk of your wealth. And the thing is, with a proper estate plan, this doesn’t have to happen! The key is to educate yourself. Knowing what you’re up against helps you plan smarter so that more of your hard-earned assets reach your heirs. 

Education is the most important part of estate planning. That’s why my planning process begins with a Life & Legacy Planning Session, where you’ll get the plain and straightforward education you need to make wise decisions about your planning, including how to keep your family out of court and out of conflict, minimize taxes, and ultimately create a plan that works for you and the people you love, when they need it. 

So, first lesson: if you suspect your family could pay estate taxes at your death, don’t wait to plan. There’s way too much at stake. Call us, and let’s get you to know about the kind of planning you want and need for yourself and the people you love. 

Vanilla Ice Thinks Life Insurance is Cool

(“Ice” and “cool” – get it? Sorry, I couldn’t resist.) 

Life insurance isn’t just for covering funeral costs – it’s a secret weapon in estate planning. Vanilla Ice suggests “maxing out your life insurance” to give your kids as much money as possible. What makes life insurance “cool” is that death benefits aren’t subject to income tax, meaning your heirs can get more bang for your buck than if you were investing the money you’d put into life insurance premiums into just about any other asset class. 

It’s worth considering what Vanilla Ice suggests here. When you take out a life insurance policy, the payout can cover any necessary taxes, probate fees, and debts, ensuring your heirs receive the lion’s share of your assets. Life insurance can help with short-term needs, like paying off a mortgage, or it can serve your family’s long-term needs, like maintaining the lifestyle to which they’re accustomed.

When you get educated via our Life & Legacy Planning process, we’ll look at your life insurance, whether you have the right amount and the right type, and ensure you are 100% clear on what it might mean to “max out your life insurance” and if you really should do that. We’ll consider whether you need more insurance, less insurance, or a different kind of insurance based on your family dynamics, assets, and what you want for the people you love after you leave.

Second lesson: If you want to be cool, plan to buy the right type and kind of life insurance. 

Ice Says Trusts Are Not Just for the Rich and Famous (and He’s Right!)

Trusts might sound like something only the super-wealthy need, but they’re an intelligent tool for anyone looking to protect their assets. 

Ice mentions irrevocable trusts specifically. These types of trusts let you transfer assets to a beneficiary while removing the assets from your taxable estate, ensuring your assets aren’t subject to estate taxes. Any assets in an irrevocable trust are protected from legal judgments and creditors IF you do it correctly and in the right jurisdiction. If it’s something you are interested in, contact us, and we can talk. In the video, Ice jokes about putting his classic car collection into a trust and setting rules, such as his kids can lease but not sell the cars. This protection ensures your heirs benefit from it, but don’t squander the assets. In other words, even after death, you can determine how your assets will be used. And if you want to protect them for future generations, you can. This is one way to create generational wealth. 

So now we’re up to our third and final lesson: If you want to protect and preserve your assets for generations, take Vanilla Ice’s advice and utilize trusts in your planning. 

Put Vanilla Ice’s Advice Into Action Today

Vanilla Ice’s video brings forward lessons everyone can benefit from. By understanding your options, including how taxes and life insurance impact your family and assets specifically, and considering using well-counseled trusts, you can safeguard your assets and ensure they benefit your loved ones the way you want. To quote his classic hit, “Ice Ice Baby,” ‘Anything less than the best is a felony.’ Take these lessons from Vanilla Ice to heart, and start building a solid estate plan today. Your future generations will thank you for it. 

We help you create a Life & Legacy Plan rooted in education and clarity so your loved ones stay out of court and conflict and your assets are protected. Once we’ve created your plan, you can rest easy knowing you’ve done the right things for the people you love most.

Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

Categories
Estate Planning

Celebrity Estate Plans Series Part 1 of 4: Michael Jackson

What is it about celebrities that always draws us in? For whatever reason, we just can’t resist a good, juicy celebrity story. So, for the next few weeks, we will look at the lives of 4 celebrities and see what we can learn from their stories. 

This week, we’re turning the spotlight on Michael Jackson. Even if you aren’t old enough to “Remember the Time” when Michael Jackson was dominating the charts, by the end of this article, you’ll see that he left holes in his estate plan that we can learn from.

Now, let’s dive in and learn how to avoid the same fate for your loved ones. 

It’s As Easy as “ABC” (and 1, 2, 3)

Before we look at the specifics of Michael Jackson’s story, let’s dispel a myth about estate planning: You need not be rich, philanthropic, or famous to need estate planning. You need estate planning if you own anything – even a bank account – and have people in your life you love. It’s as simple as that (dare I say it’s as simple as “ABC” and 1,2,3?). So, as you think about your estate planning, it’s time to “Beat It” past the misconceptions so your loved ones can empower you to do the right thing. 

Creating a Will Alone is a “Bad” Choice

So what happened in Michael Jackson’s case? His estate plan included a Will, which established trusts for his mother, Katherine, and his three children, Paris, Prince, and Bigi. 

Let’s stop because this setup already has an increased potential for conflict.

When your assets pass via “Will” (instead of via Trust), your assets must go through a court process called probate. Subjecting your assets and your family to probate can result in a long, time-consuming, public, and messy court process that can be unnecessarily expensive to resolve. 

A trust, on the other hand, bypasses the court process altogether as long as your assets are owned in the name of the trust when you become incapacitated or when you die. If your assets are appropriately transferred and retitled into the trust (called “funding” the trust), your estate can be administered privately and often takes less time than the court process. A trust can be set up and funded while you’re alive, thereby avoiding probate, or it can be a part of your Will. When it’s part of your Will, like in MJ’s case, it isn’t established or funded until after the court process. So, if you’re trying to keep your family from going through the court process, putting a trust in your Will completely defeats the purpose.

Since Michael Jackson’s assets passed via a Will, there have been ongoing legal matters in court, which still haven’t been resolved in the 15 years after his death. MJ’s family is embroiled in a dispute with the IRS, so the trusts he intended to create for his mother and children remain unfunded. Therefore, some of his assets cannot be transferred to them as he planned. It’s also highly probable that the legal disputes continue to cost the estate a lot of money. That’s money that otherwise would have gone to his mother and children. 

Taxes – A Potentially “Dangerous” Situation! 

The Jackson estate’s ongoing battle with the IRS is a stark reminder of the tax implications that can affect your plan and your loved ones. When it comes to taxes, you can’t think in terms of “Black or White.” If you intend to avoid as many taxes as possible, you don’t want to cut corners by doing your estate planning cheaply or independently. That could be “Dangerous!” 

Taxes can significantly reduce the value you pass on to your heirs, directly impacting your loved ones. So, our next lesson from Michael Jackson’s story is that the stakes are too high to attempt alone when it comes to saving money on taxes. Work with a professional who can advise you properly. We aren’t clear why Michael Jackson didn’t get the support necessary to minimize taxes and protect his estate from a long, drawn-out court process, but we know we can help you and your loved ones.

Avoiding the “Thriller” of Legal Disputes

The Jackson case also highlights the importance of choosing the right representatives for your estate. These are the people who handle your affairs after you’re gone (they’re called “executors” if there’s a Will or “trustees” if there’s a Trust). MJ’s family members have criticized the representatives for the way they’ve managed the estate. In particular, Katherine Jackson has alleged that the executors have been too frugal and are holding onto assets to maintain control. 

Conflict between your representatives and your loved ones is always possible. To help minimize the potential, we recommend you communicate your intentions to your representatives and loved ones during your lifetime. Consider holding a meeting so everyone knows your wishes and understands the intent behind your decisions. You may not be able to “Heal the World” on your own, but you can promote healing within your own family and prevent future conflict by opening the lines of communication now. 

Also, know that you don’t have to choose family members to be your representatives – even if you feel pressured. If you aren’t sure who the “right people” are, think about people you know who are trustworthy and capable of handling complex financial and legal matters. There’s also the option of choosing a professional representative, as Michael Jackson did, who might be more appropriate for your situation. 

Our two final lessons from Michael Jackson’s story are: 1) Communicate your wishes openly to your representatives and your family, and 2) Choose the right people to act for you when you no longer can. 

“You Are Not Alone” – We’re Here for You

By learning from the challenges faced by Michael Jackson’s family, you can ward off the possibility of a similar outcome for your loved ones. Your careful planning today can pave the way for a smoother transition of your assets in the future, ensuring that you can support your family after you’re gone rather than creating a mess for them to handle without you. 

It’s “Human Nature ” to want to avoid thinking about your death, much less plan for it. We get it. But we can live a more fulfilling life when we face our mortality. The good news is that you don’t have to deal with it alone. We’re here to support you every step of the way. 

We help you create a comprehensive Life & Legacy Plan from a place of education and intention so that your loved ones stay out of court and conflict and you can minimize taxes. Once you’ve created your plan, you can rest easy knowing your wishes will be honored, your loved ones cared for, and your legacy preserved. 

Schedule a complimentary 15-minute consultation to learn more.

Contact us today to get started.

This article is a service of August Law, a Personal Family Lawyer® Firm. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That’s why we offer a Life & Legacy Planning™ Session, during which you will get more financially organized than you’ve ever been before and make all the best choices for the people you love. 

The content is sourced from Personal Family Lawyer® for use by Personal Family Lawyer® firms, a source believed to be providing accurate information. This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal, or investment advice. If you are seeking legal advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

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The August Law PLLC team will work hard to deliver good quality information upon subscription. However, if you decide that you no longer want to receive emails from us, feel free to click the "unsubscribe" button at the bottom of the email received.